6. Why did ShengdaTech decide to use the higher priced stainless steel instead of carbon steel for its new NPCC lines?
A) We decided to use a higher quality steel for several reasons. First, the stainless steel has a longer useful life than carbon steel. The lines made from stainless steel have an expected life of 30 years compared to 10 years for the carbon steel. Second, the maintenance period for stainless steel requires one third less than that of carbon steel. Third, stainless steel does not rust therefore ensuring a higher level of purity for our NPCC particles. The higher the level of purity of our NPCC particle enables us to target higher value end markets. This adds up to a superior return on investment for the Company.
7. What is the schedule for ramping up production for the new 60,000 metric tons?
A) We expect our ramp- up process will be as follows:
40% capacity in April, 50% capacity in May, 70% capacity in June, 80% capacity in July and 100% capacity in August
8. How do you anticipate your product mix to change in 2008?
A) We expect our product mix will increase for adhesive, paper and paint applications. We also expect to add polyethylene to our product mix.
9. Will you increase your exports during 2008?
A) We expect that our exports will increase from approximately 1% of revenue to approximately 10% of revenue.
10. Is the average selling price for NPCC exports the same as the domestic price?
A) The average selling price for NPCC exports will be higher when compared to our average selling price for our NPCC domestic price. This will be influenced by increases in freight required to reach our international markets.
11. What applications of NPCC are expected to be exported?
A) Essentially, the same mix as applications in China, NPCC for use in polyethylene, rubber, latex and paper.